Online Gaming Market Analysis - Literature review Example

Online Gaming Executive Summary This paper is based on the concept of Online Gaming how it can be linked to social media. It focuses on the topic of online gaming and how it interacts with the different stakeholders and influences different business operations. The paper highlights the five steps to social media success including existing social media strategies, social media trinity, integration of strategies, resource identification and implementation of metrics. It also encompasses the discussion on the drivers of the online gaming sectors including the needs of the target audiences. Table of Contents Introduction 4 Review of Literature and practice 5 Discussion 7 Step 1: Analyze your existing media. 8 Step 2: Social media trinity 8 Step 3: Integrate existing strategies 9 Step 4: Identify the resources 9 Step 5: Implementation and measurement 10 Conclusion and Recommendation 10 Reference List 13 Introduction The concept of social media came to light with the advent of internet and its ability to connect people who are otherwise geographically isolated. Social media helps to connect people and by allowing them to share messages, pictures, videos and also letting them to have video conferences over the internet. The rise of social media services like Facebook, YouTube, Twitter, and Google plus has changed the way people communicate with each other over long distances (Ellison, 2007). It has opened up new window of opportunities for marketers to post advertisements for the target audience. The popular social media services like Facebook, Twitter, YouTube, etc. are used as marketing communication medium, to connect to a large number of target audiences at the same time and it can also be conducted in a more streamlined fashion (Doreian and Stokman, 2013). These services have made the world a more connected place than before. People all around the world can now communicate with each other without any major restrictions (Lin and Lu, 2011). Being a highly connected platform, Social media have also facilitated much faster spreading of work of mouth. People can share their opinions and experiences to a large number of people, which as a result puts a significant impact on their purchasing behaviour (Lewis, Gonzalez and Kaufman, 2012). As word of mouth can be both positive as well as negative, therefore social media can also prove to have catastrophic impact, if any scandal made by a firm goes viral. Despite of several negative and positive issues of Social media, it is rapidly gaining popularity among the users and the marketers alike. Apart from the commonly used social networking services like mentioned above, online gaming has also created its own social media network among the gamers. The online gaming has evolved over the years and has created worldwide community of gamers. Over the years, online gaming has gained a lot of popularity and the overall consumer base has also increased exponentially (Thomsen, 2014). The social network created by online gamers can also prove to be a lucrative target audience for certain companies that sell products associated with their lifestyle. The online gaming platform may not have a large audience base as compared to that of the popular social media services like Twitter and Facebook. However, the exiting community of online games have exhibited a strong communication among them owing to their common area of interest in gaming (Statt, 2014). Online games mostly belong to the young age group, and exhibit a very streamlined area of interest, these as a result have given rise to new opportunities for the firms to identify and meet their needs. The social network of gamers are mostly comprised of individuals who are mostly attracted to technology based products and are willing to spend a significant amount of money for their entertainment (Holodny, 2014). These individuals exhibit a specific behavioural pattern that can influence several stakeholders such as potential customers, game developing companies, hardware developing companies and even the government. These stakeholders are directly or indirectly impacted by the online gaming industry and the purchase behaviour of the online gamers. Review of Literature and practice Safko and Brake (2012) have mentioned that the humans exhibit an instinctive behaviour of create a community and connect with each other. The term “social” can be described as the instinct that drives people to connect with other people. The gregarious nature of human being has influenced the way they live their lives and is also responsible for designing their lifestyle. The natural instinct of a human drives him to connect to people with identical nature (Scott, 2012). Thus in a crowd a person is likely to choose an individual who exhibits highest compatibility and similarity in interest. This as a result leads to creation of community or a network of likeminded people. The interaction between the different people in a group largely influences their decision making in their daily life. The social media can be described as a platform that helps the individuals to make those connections and communicate with likeminded people (Wrzus et al, 2013). Prior to the technological advancements, the network created among the people was mostly based on face to face communication and sending letters. However over the years, with the advent of internet the people have found new ways to communicate with each other through email, instant messenger services, social services like Facebook, Twitter, YouTube, etc (Palonen and Hakkarainen, 2013). The people now-a-days can easily connected to almost anyone and share their opinions with the rest of the world. The social media services have created a more open world where information sharing can be done in a few clicks of a button. The social media services as discussed above helps the users to communicate with a large number of people at the same time and at ease. This as a result helps to bring likeminded people and create communities where they can discuss topic of their interest (Ellison and Boyd, 2013). From the point of view of marketing, social media services has opened up new ways to study the consumers’ behaviour and at the same time communicate with them with product advertisements. This as a result has given rise to the social media marketing, where the marketers get the opportunity to communicate with a large number of customers at a personal level (Katona, Zubcsek and Sarvary, 2011). The social media marketing is gradually increasing in popularity with the increase in social media service users. The constantly increasing user base of social media services has also allowed the marketers to target a wide range of target audience. Social media also offers a more cost intensive marketing communication tool. A social network can be formed by any number of people with the same set of interests who choose to stay in close proximity with each other and often form discussion group within them. This as a result creates a reference group including those individuals. The members in the reference group often influence each other’s purchase decision and their purchasing behaviour is also impacted by each other. Thus it creates a lucrative opportunity for the marketers to conduct their marketing communication based on their needs and preferences. Moreover, influencing the decision of one of the members of the reference group is likely to influence that of the rest of the members. It has been observed that the members in the in their social network discuss among themselves and gather product related information before buying a particular product. Thus if a marketer is able to delve in to the social networks of the consumers then it will be easier for them to cater to their needs and at the same time influence their purchasing behaviour in favour of a particular brand. Brand preference is largely dependent on the social status associated with a particular product and its company. The perceived value of the brand among the members of the reference group largely determines the way how the brand is being perceived by the consumer. A brand is able to impart a high social status to the consumer only if it is highly valued by the other members of the social group. The online gaming sector is relatively small as compared to the user base of Facebook or Twitter. However, the people engaged in online gaming share the same passion of gaming and are often engaged in group discussion before they make any purchase related to games or gaming hardware. Thus creating a strong brand image among the gamers will also allow the marketers to increase the brand preference among them, thereby improving their revenue generation. The social media can also put negative impact on a brand. The members in a reference group can also choose to spread negative brand image about a particular product depending on their individual perception or experience. Discussion The social media platform can be utilized to understand the business model behind the online gaming and how the social network among the users can be leveraged by the marketers and how it can influence the associated stakeholders. The five steps of social media success discussed by Safko and Brake (2012) suggests that there are five identified steps which can be followed by the marketers to gain success from social media marketing. The five steps are 1) Analyze your existing media, 2) The Social media Trinity, 3) Integrate Strategies 4) Identification of resources and 5) implementation and measurement (Safko and Brake, 2012). The marketing activities of the firms have undergone a drastic shift over the years owing to the advent of social media services. The traditional marketing tools are slowly being questioned for their relevance in the near future as the consumers’ lifestyle and social interactions are taking drastic turns. The people are spending more time in social media and the internet than in front of the television or news paper. This as a result is rendering these communication medium passive. The media content consumption is eventually being streamlined to the internet and the consumers are showing a trend of responding towards the social media advertising. The “Fundamental shift” of power in the business market scenario indicates that the customers are gaining more power and control over the news and ad agencies. This suggests that the marketing communication needs to be more customers focused where advertisements or marketing communication messages needs to be targeted in a tailored fashion. The people are no longer interested to see advertisements about products that they are not interested in. Thus the marketers who are capable of designing and delivering advertisements based on the personal likings and preferences of the customers are more likely to gain the attention of the target audience. The increase in the interest usage has also shifted the media preference of the consumers. The people are more comfortable in gathering their daily news from the internet than from traditional news channels like CNN, BBC, ABC, etc. The news blogs or websites have proved to be more convenient for the young views with a relatively busy lifestyle. It is easier for them to read news on their smartphone devices whenever and wherever they want, rather than sticking in front of their television. This clearly suggests that the marketers need to shift their focus on this shifting trend of media consumption. Since the customers are spending a significant amount of time online, socializing and browsing content, so the relevance of digital marketing has increased over the years and it is eventually taking its place as a mainstream marketing communication tool. As far as online gaming community is concerned, the belonging members also offer significant opportunities for the marketers. Since the marketers are keener to offering tailored advertisements based on the personal preferences of the customers, therefore it makes it imperative for them to target communities of people with a common interest (Versace, 2014). In order to ensure that the online gaming sector can be properly leveraged, the five steps of social media marking needs to be implemented. Step 1: Analyze your existing media. This stage assesses the strengths and weakness of the existing media used by the companies. The gaming sector is associated with the selling of gaming hardware, new games, in game purchases, etc. The existing media used by this industry includes television commercials, PR activities, and a large portion of their marketing activities are associated with internet advertisements. People who are avid gamers often lookout for latest news in the gaming industry, particularly in terms of latest releases of game titles and upcoming hardware advanced enough to run the latest games. These consumers often browse in websites like Gamespot, Shacknews, N4G, etc (Bwin, 2015). This as a result leads to increased web traffic of gamers in to these websites, which gives the marketers an opportunity to attract the target customers by posting their ads in these domains thereby attracting the target customers. Therefore the existing media used by the marketers are mostly focused on the internet marketing. Step 2: Social media trinity The social media trinity can be considered as a triangle with three corners, blogging, micro-blogging and social networks. These three platforms act as robust communication medium that allows the marketers to ensure that they are able to establish a close communication with the customers. The first medium is the blogging, which acts as an integral part of social media. A blog allows a company to create a brand image regarding a particular product or service and at the same time also allows them to develop and group of followers who can share their opinions, suggestions and issues (Rettberg, 2013). Some of the most popular gaming blogs are Kotaku, Joystiq, Destructiod, Guardian games blog, etc (Dredge, 2009). Currently in the online gaming sector, the most played online games are currently the League of legends, followed by Counter strike: GO and DOTA 2 (Harris, 2014; Statista, 2015; Gaudiosi, 2012). These highly popular games have their own dedicated blogs where the players can post suggestions, issues, bug reports, and can also discuss about game tactics to improve their performance. The micro blogging or twitting is the relatively a new concept in the social media which has attracted a lot of attention. The social media service ‘Twitter’ allows the users to share short texts and pictures called tweets. The tweets are usually limited in character, where the users can post their opinions in short texts and can also involve in discussions regarding a particular topic of interest (Gerbaudo, 2012). The social networks such as Facebook, Google plus, YouTube are largely used by the companies to communicate with their target customers regarding their upcoming product release and at the same time these platforms also allow the gamers to communicate among each other. Step 3: Integrate existing strategies Integrate the existing strategies in to the trinity can prove to be helpful for the companies in terms of increasing their exposure of marketing communication. In this step it is advised that the firms evaluate their existing strategies, remove the non performing factors and implement the rest in terms of the social media trinity (Couldry, 2012). Using the social media trinity helps the company to create a wide range of communication strategies thereby drawing the customers towards a specific brand. Step 4: Identify the resources After the third stage the company will have an integrated marejkting strategy ready for implementation. However, in order to implement it the company needs to ensure that it has the required resources and competencies (Evans, 2012). In this step the companies are advised to analyze their existing resources and identify the gaps that need to be filled to apply the marketing plan devised in step 3. The existing resources of a firm are usually used after the traditional marketing tools. Since the social media marketing concept is relatively new so it becomes challenging for the higher management to implement it in their exiting strategies. However, since the online gaming industry is born during the era of internet and social media, and also the fact that it is completely dependent on the internet, so implementing integrated social media marketing is not an issue. Step 5: Implementation and measurement In order for a firm to measure their rate of return on their currently implemented marketing strategies, they must implement a robust measurement system which will measure the effectiveness of the strategies and whether or not it is delivering the desired result. The measuring the effectiveness in the social media marketing is more efficient than in case of traditional tools. A viewer when clicks on a particular advertisement in a webpage or in a blog or social media, it can redirect the viewer to the online purchasing page. Any purchase made by the customers can be easily tracked to measure the effectiveness of the marketing strategy. Conclusion and Recommendation From the above discussion regarding the five steps of social media success indicates that in order to achieve success in the increasingly competitive and changing market environment the marketers need to adopt the upcoming trend of marketing. The rise of social media and the ever increasing internet usage is reducing the relevance of the traditional marketing media. The customers are spending more time in the social media and browsing the internet. This as a result has opened up new ways for the marketers to connect to the customers and inference their purchasing decisions. The social media trinity discusses about the three social media tools: blog, micro-blog and social network (Smith and Zook, 2011). These tools need to be utilized in an integrated manner so as to increase the impact on the customers and influence their purchasing decision in favour a particular brand. However, devising a strategy will not be enough if the companies are not being able to implement the strategies by leveraging their resources and competencies. Thus it requires a proper infrastructure and sanctioning from the higher management so that sufficient funds can be channelled to apply the desired strategies. The online gaming sector is relatively a niche segment which is characterized by users with unique tastes and preferences. These customers exhibit strong communication with fellow gamers and often engage in discussion regarding new products launches. Since these people are highly connected to their reference groups so it is highly likely that before making any purchasing decisions, they will discuss about it in the group. This as a result increases the relevance of word of mouth. The word of mouth can largely influence the purchasing behaviour of the customers. Therefore if a company is able to create a positive brand image among the customers, then it is highly likely it will follow a snowball effect and will further increase the brand preference among the target customers. Social media has made it easier for the companies to implement ‘buzz’ marketing and create hype regarding a particular product. As far as the online gaming industry is concerned, identifying the existing stakeholders will help to understand the importance of this sector and how it can be further expanded. The layer of stakeholders is the gamers and the game development companies. The gamers are the potential customers to those companies that are developing games and organizing gaming tournaments. Most of the online games earn revenue though one time purchase as well as in game purchase of virtual currency or in game abilities or accessories. The in game purchases in the online gaming sector has proved to be quite lucrative as the gamers often spend a lot of money on in game purchases to boost their gaming performances. These two stake holders are the primary entities that help the industry to grow. The companies are trying to seek out new ways to create a positive word of mouth within the gamers’ community. This as a result increases the customer preferences. While gaming online, the gamers often communicate with each other by text chats or voice chats. This as a result allows them to create new nodes in the social network, thereby increasing the target audience base. The second layer of stakeholders is the computer hardware companies that develop new hardware and gaming consoles and other gaming devices. The video games are becoming increasingly graphic extensive, which may require an updated system to play. Thus these companies are largely dependent on the gaming sector and try to influence the purchasing behaviour of the customers. The increase in competiveness in the computer gaming hardware industry has increased the valuation of the gaming industry as well. A lot of hardware companies are dependent on the gaming industry. The third layer of stakeholders is the government. As mentioned before the online gaming industry regenerates a significant portion of its revenue from the online in game purchases. These purchases are made quite frequently by the gamers and often turn out to be an addiction. Since, the online games can be played by anyone all across the world, so it increases the overall online international transactions of the nations. This in turn also helps the government to earn a significant share of revenue. 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